Molly Taylor has created history at the Rally Australia event in Coffs Harbour, becoming the first woman to win the Australian Rally Championship.

During the final round for both the ARC and the World Rally Championship in 2016, the Subaru factory-backed pilot secured both a rally victory and the series crown in the event's final stages.

The Sydney-based racer's run to victory came as title rivals Simon Evans and Harry Bates faltered, opening the door to Taylor's unlikely victory at the wheel of a Subaru WRX STI with closer ties to production models than heavily-modified rival machinery.

Taylor also benefited from a final-day penalty to fellow competitor Mark Pedder that saw her and co-driver Bill Hayes elevated to first place, securing championship victory over fellow Subaru contender Simon Evans by just two points.

The result represents a landmark victory for Subaru, which returned to rallying in an official capacity in 2016 after withdrawing from the series several years ago.

Taylor said the result is proof that "dreams really do come true".

"Talk about taking it down to the wire!" Taylor said.

"We knew we had to give it everything on those last two stages after a really consistent run all weekend and we pushed so hard. And then to get the news that there was a possible penalty for Mark, it was like being on a rollercoaster."

Taylor paid tribute to the team, saying Hayes, Les Walkden and the team had done an amazing job all year. The new ARC champion also praised Subaru, saying it was pleasing to achieve the result for a team with a rich rallying history.